AA/Warc adspend report: industry analysis
Despite most traditional media being stagnant or in decline, the UK’s ad market expanded at its strongest rate since 2015 last year.
According to the latest data from the Ad Association and Warc, UK adspend rose 6.3% year-on-year to reach £23.6bn in 2018, marking the ninth consecutive year of market growth and highest annual total since monitoring began in 1982.
Here, experts from across the UK media sector share their views on the results.
While headlines may focus on this (pleasing) growth in adspend, there’s devil in the detail: most of the growth was in sales-focused channels like search and online display, channels where there can be sizeable variation in ROI. Brands need to ensure that they don’t lose sight of long-term brand building as a consequence.
Kraft-Heinz’s recent about-turn is a case-in-point. Incoming boss, Miguel Patricio, a marketer by trade, looks set to move away from the zero-based budgeting and short-term mentality that’s contributed to its poor performance in order to invest more in its brands – an approach some other brands may benefit from following.
As the IPA Bellwether report also showed us last week, there’s increased pessimism among marketers about the future – both for ad spend and business performance – as compared to last quarter. It’s critical that brands keep on top of the opportunities available in a downturn and continue to invest in the long-term rather than seek out a fast buck as research shows they will come out stronger when the market returns to growth.
Yet another consecutive quarter of growth and a record level of investment really highlights the importance businesses are placing on advertising. Even in the face of uncertainty, brands are increasingly turning to advertising for long term and short term growth.
Advertising has always been an important driver of economic growth and contributes £120bn to UK GDP – the beginning of 2019 proved that brands are seeing a serious return in investment on ad campaigns.
From Carlsberg’s humbling rebrand to Gillette’s thought-provoking and polarising ‘The best men can be’ campaign, we continue to see campaigns that break the norm and challenge brands to move away from their comfort zone. The result isn’t only an industry that is growing year on year, but a challenging and exciting moment that brands can feed off to create stronger ROI.
Jeremy Hine, CEO, MullenLowe Group UK
During a time of political and economic uncertainty in the UK, the report provides welcome optimism to marketers and the wider industry. It’s great to see the ninth consecutive year of market growth and highest annual total since AA/WARC started monitoring adspend in 1982 – but what’s especially encouraging is the upwards revision of the forecast for growth in the future, even amidst concerns about Brexit and what it might mean for in the industry.
The figures show that even in troubling times, clients recognise that using communications, particularly online, to drive brand awareness and engagement is fundamental to their growth. It would be a mistake however to use these findings as an excuse to get complacent. In this time of uncertainty agencies must continue to prove their worth to their clients by listening to business challenges and in response, create campaigns that stand out, have impact and deliver results.”
In 2018, annual and fourth quarter ad spend totals were the highest on record. Innovative digital formats are coming on to the market thick and fast, offering opportunities for brands to experiment with new ways of reaching audiences.
As the total 2019 ad spend is forecast to hit £24.7bn, and growth is being driven primarily by continued investment in paid search and online display, we can expect this to be a big year for advertisers and brands exploring emerging opportunities across related digital formats like paid search on Amazon, OTT video and audio creative.
We’re already seeing this happen with VoD, which accounted for more than 7% of total TV ad spend in 2018.